Just be careful opening it....
"Staples is said to be in talks to buy Office Depot" by Tara Lachapelle, Bloomberg News February 04, 2015
NEW YORK — A merger of Staples Inc. and Office Depot Inc. might help them weather the competition from online and big-box retailers in a way that RadioShack Corp. couldn’t.
The music stopped.
The three companies were all hit hard in the past decade by discount-offering giants such as Amazon.com Inc. and Walmart Stores Inc. Their fates diverged this week. RadioShack is preparing to file for bankruptcy protection, while the other two — in a less dire situation — are considering combining.
Staples and Office Depot shares traded Tuesday at prices they haven’t reached in years as investors showed support for their potential merger, which would consolidate the No. 1 and 2 office-supply chains....
Analysts estimate $1 billion to $2 billion of costs could be cut through the deal, which may give the combined company some room to lower the prices of its products in hopes of drawing in shoppers.
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“From a financial standpoint and from a competition standpoint, it makes sense,” Joseph Feldman, an analyst for Telsey Advisory Group in New York, said in a phone interview. “Shareholders on both sides are cheering the deal. It probably would be a good thing to see happen for the industry and for both companies.”
The question is whether the merger would secure approval from antitrust regulators, though analysts are leaning toward the idea that it can. Office Depot purchased OfficeMax Inc. in 2013, so a subsequent deal between Office Depot and Staples, based in Framingham, Mass., would leave one major office-supply chain.
Like a monopoly? I was taught and told those were bad and free enterprise was the way to go.
The companies can argue that the competition is far broader and now includes Amazon, Costco, Walmart, and Target. That’s something the Federal Trade Commission — the same agency that blocked Staples from buying Office Depot in 1997 — noted in its approval of the OfficeMax deal.
“Our decision highlights that yesterday’s market dynamics may be very different from the market dynamics of today,” the FTC said in its closing letter about the Office Depot-OfficeMax transaction in November 2013.
That analysis “doesn’t leave the commission a lot of room” to challenge a Staples merger today, said Morris Bloom, an antitrust lawyer at Axinn, Veltrop, & Harkrider LLP in Washington.
“The fact this merger is of the remaining two office-supplies stores should not lead to anticompetitive effects because consumers have more choices than the super-supply stores,” said Bloom, a former FTC lawyer.
They will have one less after the merger, and it has led to non-competiveness during the gilded age hen the robber barons (like the oil barons now) lowered prices so much it drove small businesses into bankruptcy and closure.
Starboard Value, which has stakes in both Staples and Office Depot, has been urging the retailers to combine.
The FTC’s decision to allow Office Depot and OfficeMax to combine “probably encouraged Starboard to push for the merger,” said Chris Pultz, a portfolio manager at Kellner Capital, an investment firm in New York. “They will probably get a second request from the FTC, but I find it hard to believe that they would have a case to block the transaction.”
Becoming one company isn’t a perfect long-term solution. Even though their outlook isn’t nearly as grim as RadioShack’s, office and school supplies are increasingly a commodity business, and it will still be difficult to match competitors’ low prices without eroding earnings, said Brian Yarbrough, an analyst for Edward Jones & Co. in St. Louis.
In the most recent back-to-school shopping season, Staples’ school supplies cost 53 percent more than an identical basket of goods at Walmart and Target, according to a study by Bloomberg Intelligence in August.
Shareholders would benefit from a deal because it would give a pop to Office Depot’s stock price and there would be synergies for Staples, Yarbrough said.
From which CEO and other officer bonuses flow.
“But in the longer run, I just don’t see how this combined company is any better off,” he said. “Starboard cares about one thing: this deal going through. Five years down the road, they’re not going to be anywhere near this company; they’ll be long gone.”
And don’t forget what happened after Sears Holdings Corp. and Kmart merged in 2005. The deal was an attempt to stem falling sales and fend off Walmart. Since that transaction closed, Sears has lost three-quarters of its value, shut stores, eliminated jobs, and sold off assets to raise money as it burns through cash.
“Merging two bad retailers in a tough environment doesn’t make one good retailer,” Yarbrough said.
And that, my friends, blows out of the water all government and mouthpiece media garbage regarding the tremendous economy. If the economy were really recovering (and not just for the upper crust and 1%) retail would not be in bad shape.
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"Staples, top rival agree to unite as sector convulses; Deal would create an office-supply giant" by Taryn Luna, Globe Correspondent February 04, 2015
It’s happened to booksellers and retailers of consumer electronics. Now the country’s once-booming crowd of office-supply superstores may be reduced to a lone survivor with an uncertain future in the digital era.
This thing is already falling apart!
Staples Inc. of Framingham agreed Wednesday to buy rival Office Depot Inc. for $6.3 billion. The merged company would follow the same path as Barnes & Noble Inc. , America’s last big brick-and-mortar bookseller, and Best Buy Co. Inc., the only big-box chain of electronics stores still standing.
And those two are wobbling, fyi.
Consumers have more places to shop as the online giant Amazon.com Inc. and other imposing brick-and-mortar retailers have increased their inventory of office supplies.
Retailers such as Walmart Stores Inc. and Costco Wholesale Inc. have become formidable competitors to big-box specialty stores like Staples, once so successful they were known as “category killers.”
“Now add in online and the entire world becomes a competitor to any so-called dominant retailer,” said Marshal Cohen, chief retail analyst with the NPD Group of New York.
In the case of office supply stores, technology and innovation have created an additional business challenge.
The industry faces a long-term decline in core products such as paper, ink, and toner in the digital age.
Analysts and retail specialists caution that the proposed merger of Staples and Office Depot will only serve as a temporary fix to the struggles of the two companies because the industry faces more competition and waning demand for basic goods.
Staples is the largest office-supply superstore. Over a year ago, Office Depot merged with the industry’s number three competitor, OfficeMax Inc., to consolidate and save on costs but still remained smaller than Staples.
This isn’t the first time Staples and Office Depot tried to merge. The Federal Trade Commission rejected their buyout plan in 1997 because it would be anticompetitive. But analysts said the makeup of the business has changed so dramatically that they expect the deal to have a better chance this time.
The combination of the two companies would create a sprawling international retail business — with $39 billion in annual sales and more than 4,000 stores. Staples said the deal will save at least $1 billion in annual costs by the third year after it closes, but it will also require a one-time cost of approximately $1 billion to combine the two companies.
“The strategic and financial benefits of Staples’ acquisition of Office Depot are compelling,” said Staples chief executive Ron Sargent in a conference call. “The combined company is better positioned to provide value to customers and compete against a large and diverse set of competitors.”
But Staples stock slumped 11.99 percent to $16.73 on the merger news Wednesday. Office Depot shares rose 2.21 percent to $9.48.
The deal was announced about two weeks after a well-known activist investment firm with stakes in both companies began to publicly pressure Staples to merge.
Starboard Value LP, which previously persuaded investors to replace the entire board of Olive Garden’s parent company, owns about 6 percent of Staples and nearly 10 percent of Office Depot. The firm wrote a letter to Sargent arguing that the deal would lead to billions in cost savings and threatened a “significant leadership change” if he didn’t heed its advice.
Why am I seeing JOBS there?
Analysts have largely applauded the idea over the last few weeks, saying it would increase buying power, cut costs, and reduce the number of competitors.
“Now that you’re one company, you can look at the whole picture of every single market, close more stores and keep the ones you really want,” said Oliver Wintermantel, a Staples stock analyst with Evercore ISI. “From that perspective, it really makes a lot of sense.”
Rajiv Lal, a retail professor at Harvard Business School and coauthor of “Retail Revolution: Will Your Brick & Mortar Store Survive?,” said that if the deal is approved, Staples’ future will remain uncertain.
The merger will allow Staples to cut costs and give it greater buying power. But the company is also inheriting another 2,000 stores and will have to shutter underperforming locations quickly to avoid losing money. Comparable store sales in North America haven’t grown at Staples or Office Depot since at least 2007.
Lal said Staples will have to dramatically change the existing stores to operate a profitable brick-and-mortar business. He said the company should strictly sell products and offer services aimed at small- to medium-sized businesses and move away from the everyday consumer.
In other words, all the wealth has been sucked out of this economy.
“It’s a short-term solution and might give them breathing room for a while,” Lal said of the merger. “It’s not clear that this is a category that will continue to be viable. If I were asked to start an office supply chain today, I don’t think I would.”
It's a dying industry.
Wintermantel doesn’t expect the FTC to have a problem with a proposed merger because there are more competitors in the market now. But Staples and Office Depot control at least half the business-to-business office supply market serving very large companies, he said.
Regulators could question whether the merger would hurt competition in that market. “From a retail side, the FTC should have no objections whatsoever,” Wintermantel said. “Among the Fortune 100 and Fortune 500 companies, it’s really just the two of them.”
So approval really doesn't matter. Like we have seen with media ownership and the rest, it's in the hands of a few people that all basically think alike.
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Not everyone is happy with the $taple job:
"Obama criticizes Staples over employment policies" by Taryn Luna, Globe Correspondent February 11, 2015
President Obama’s criticism of employment policies at Staples Inc. has thrust the Framingham retailer into the center of a heated debate about the fate of part-time workers in the age of the Affordable Care Act.
Staples has reportedly threatened to fire part-time workers if they clock more than 25 hours in a week — a level low enough to avoid triggering a health insurance obligation for the company.
Okay, first of all, this jerk was warned this would happen before the bill was even law but said no, no, hours won't get cut back and if you like your plan and doctor, you can keep your plan and doctor. Now he is out there complaining about it?
In an interview Tuesday with the website Buzzfeed, Obama criticized Staples and other big employers for finding ways to skirt the law at the expense of low-wage workers.
Why is he going around the corporate pre$$?
“I haven’t looked at Staples stock lately or what the compensation of the CEO is, but I suspect that they could well afford to treat their workers favorably and give them some basic financial security, and if they can’t, then they should be willing to allow those workers to get the Affordable Care Act without cutting wages,” Obama said.
“It’s one thing when you’ve got a mom-and-pop store who can’t afford to provide paid sick leave or health insurance or minimum wage to workers — even though a large percentage of those small businesses do it because they know it’s the right thing to do — but when I hear large corporations that make billions of dollars in profits trying to blame our interest in providing health insurance as an excuse for cutting back workers’ wages, shame on them,” the president said.
Such a $how fooley when he has presided over a $y$tem that has done that for the last six years while he did nothing but enable and a$$ist in it.
Staples responded Wednesday to Obama’s comments, saying “the president appears not to have all the facts.” The company’s policy on part-time hours is more than decade old and predates the Affordable Care Act, said Kirk Saville, a Staples spokesman.
“It’s unfortunate that the president is attacking a company that provides more than 85,000 jobs and is a major taxpayer,” Saville said.
He doesn't know about the store closings, does he?
The latest exchange isn’t the first time Staples has found its way into political headlines.
Republican Mitt Romney, the president’s 2012 election opponent, often cited Staples as his greatest investment and job-generating success when he led the Boston private equity firm Bain Capital. Tom Stemberg, founder of Staples, was a vocal Romney supporter and often criticized Obama on the campaign trail.
The Affordable Care Act requires businesses that employ more than 50 workers to pay health insurance benefits for anyone who exceeds 30 hours in a work week. A mandate went into effect earlier this year that requires companies with more than 100 employees to provide affordable insurance to 70 percent of its full-time workforce or pay fines.
The rules have triggered maneuvers in the retail industry, a business known for low wages and a largely part-time workforce, to avoid paying extra costs.
Wal-Mart Stores Inc., the country’s largest private employer, Target Corp., and Home Depot Inc., among other retailers, have eliminated their part-time benefits programs.
The National Retail Federation, the industry’s largest trade group, has opposed the Affordable Care Act, saying it would drive up expenses for retailers. The group disapproved of the definition of a full-time employee as anyone who works more than 30 hours in a week.
Staples came under fire more than a year ago when employees said the company introduced a policy limiting part-time workers to 25 hours a week. In a story posted this week by Buzzfeed, anonymous workers said the company recently threatened to fire employees who did not comply with the rules.
Tom Juravich, a professor of sociology and labor studies at the University of Massachusetts Amherst, said that cutting hours to reduce costs is par for the course in retail.
“Employers have for many years now been trying to keep people on part-time status to avoid having to pay benefits for them,” Juravich said. “The problem is that companies like Staples and Walmart are doing quite well by limiting the costs they pay for their workers.”
Obama’s comments give legitimacy to calls around the country for better treatment of low-wage workers, Juravich said.
“This is not just a campaign of young activists,” he said. “These are campaigns supported by the president of the United States.”
Oh, really? The president finally a believer in Occupy, which occurred three years after he came to town to change things and three years after security squads busted 'em up.
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At least the bonuses were paid on time.
UPDATE: Staples’ earnings slump 36%
